Restaurant Industry Will Need to Focus on Customer Loyalty and Value to Grow in the New Normal, Reports NPD

Chicago, February 12, 2013 — With little to no growth forecasted for the restaurant industry over the next several years and consumer frugality being the “new norm,” restaurants will need to cater to the needs of their cost-conscious customers to build loyalty and enhance value, according to The NPD Group, a leading global information company.  NPD foodservice market research finds that, although there were over 61 billion restaurant visits in 2012, restaurant traffic counts have yet to recover to pre-recession levels, and it’s more difficult now for operators and their suppliers to find growth paths in the new normal marketplace of less consumer demand.

At the heart of the new normal is a different consumer mindset, a mindset shaped by a hard-hitting recession from which consumers are still recovering and ongoing concern about their financial stability, according to a new NPD report entitled, Planning for Growth in the New Normal Marketplace. Many consumers have had to adjust to having less, including less confidence in their government and their employers, and spending less.  Nearly three of every four Americans today consider themselves cautious and controlled in their spending habits. More recently, the imposed payroll tax increase with its impact on wages, severe weather, and rising gasoline prices are all providing added stress. The new consumer mindset has restaurant operators challenged to find ways to rebuild or enhance consumer trust in their brands and in the value of their offerings in order to grow at a faster pace, finds NPD.

Source: The NPD Group/Planning for Growth in the New Normal Marketplace

The return in building customer loyalty for a restaurant operator is significant, according to the report. For example, NPD’s QSR Market Monitor which tracks the correlation between loyalty and visits, finds that loyal quick service restaurant (QSR) customers visit twice as often as QSR restaurant switchers. Other advantages that loyalty brings are higher brand awareness requiring less costly marketing, loyal buyers bring in other buyers; loyal buyers tend to be less price sensitive, and have a higher tolerance for mistakes.

“The current new normal marketplace requires operators and their suppliers to develop or realign their marketing strategies to address the needs of today’s consumer, like incentives that keep customers happy and deliver perceptions of value,” says Bonnie Riggs, NPD’s restaurant industry analyst.  “It’s also important to keep in mind that there are other marketplace growth opportunities to leverage, and there will always be winners, even in a soft market.” 

* Loyal quick service customers are those allocating 20% or more of their QSR visits to the chain, switchers allocated 19% or less

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